Startup Circle: How does PagarBook financially empower SME workforce in India?

Workforce management software helps organizations plan, manage, and track employee work, including labour requirements, employee schedules, and paid time off (PTO). In India, a major workforce working in small business is unorganised. The team at PagarBook realised that there is no promising solution to manage more than 100 million SME workforce in India.

Thus, they created one-of-its-kind workforce management software - made-in/for-India. Rupesh Kumar Mishra, Co-founder, PagarBook, in interaction with CiOL charts the journey and the way ahead for the company.

Tell me about the founding team of PagarBook.

We are three Co-Founders at PagarBook. Adarsh Kumar, Arya Adarsha Gautam, who is also the CTO and me, Rupesh Kumar Mishra. Together in 2018, we had founded India’s first vernacular knowledge-sharing social media platform called GyanApp, which catered to non-English-speaking Indian users. That gave us the target group (TG) for PagarBook.

How did you transition from the GyanApp, since PagarBook is an accounting tech app?

PagarBook is a Sequoia funded, workforce management solution provider. Through our journey with GyanApp, we were sure that we wanted to cater to a similar target group (TG) - people who are new to the internet, mobile-first users, based out of tier- 2/3 or smaller towns and villages in India. We chose SME as a segment since we saw potential in workforce management here. To begin with, we met approximately 450 small businessmen and their employees about the issues they faced as compared to their corporate counterparts. Some observations were:

An SME employee cannot approach a bank or mainstream financial service provider for small loans.

No technology infrastructure profiles these SME employees. This obstructed impeded them from proving their creditworthiness. This, despite that there are roughly 350-400 million people who work in SMEs in India. There are more than 65 million SMEs that contribute 30% of India's GDP. To solve this problem at the source, we built this easy-to-use workforce management solution for small business units to manage their employees.

An employer could now maintain an employee database, manage payroll, attendance, make payouts etc. using this app. By March 2020, we had 4000-5,000 monthly active SMEs on the platform. Currently, we have more than a million monthly active SMEs on the platform and we manage roughly 2-2.5% of the whole SME workforce on the PagarBook platform.

Does PagarBook cater to B2B SMEs or are you catering to startups too?

The suite of PagarBook, as a product, is focused on small and mid-sized semi-formal to informal businesses. That is, 80% of the businesses who use PagarBook are non-readers and the rest 20% are traders like wholesalers, retailers, supermarkets etc.

Are people readily outsourcing their workforce management? Are they organically signing up for PagarBook?

It is not that they have outsourced the work to us, we do not manage their employees on our payroll. They use our software and hardware solutions for efficient employee management on their own.

What are your marketing strategies? How are you reaching people across the country?

The core reason behind our large user base in a span of 9-10 months from zero to over 1 million monthly active SMEs is understanding the nuance of their problem. That drew most of our app users organically, by word of mouth. Roughly 40% of our growth is organic. Also, having a brand ambassador in Akshay Kumar really helped us market ourselves as a trusted brand.

What about the cybersecurity aspect of the software?

We understand that PagarBook is a financial service and not just software. This is why all the PagarBook data is secured on the cloud, hashed using different keys. Without the permission of the employer, our support service also cannot see the data.

What have been your biggest challenges in managing PagarBook? How did you overcome those challenges?

As I said, gaining people’s confidence in the product was imperative. And this, we overcame by having Akshay Kumar back the brand. The TVC with him helped us build the faith we needed among the public.

Are you joining hands with some banks or new financial startups to further the line of credit lending?

Yes, we intend to. Currently, we have around 7-8 million being managed on the PagarBook platform. We will make the credit history or creditworthiness score of every employee and then tie up with other NBFCs. We are already in talks with a few banks and NBFC for the same.

What sets you apart from your competitors?

We are a very customer-focused team that is dedicated to building relationships. We were the first to launch this product in India and have the largest distribution in the employee management segment. The idea is not to see competition but build products that can be useful to organize sectors. And if in that quest, if someone replicates us, it will show that it is a successful product!

What are your plans for the coming five years?

Currently, we are managing ~2- 2.5% of India's SME workforce. In the next 12 to 18 months, we want 10% of India's SME workforce (~30-35 Mn people) to be managed on the PagarBook platform. Secondly, we will continue to build value-added layers on this platform, like how we recently added biometrics, selfie and location-based attendance, where employees can mark attendance showing their location. Secondly, we are building a financial services layer on top of this software. We are soon introducing a product called Early Pagar- a financial services credit line for employees. We also want to give a banking experience to these employees like bank transfer products, saving account and so forth.